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Corporate Fixed Deposits: Unsecured, Not Fixed
Sucheta Dalal 26 April 2016
Depositors continue to struggle to get their money back from certain companies
 
The bad news for those who invest their life’s savings in unsecured corporate fixed deposits (FDs) is that the government doesn’t really care about their plight. On 10 February 2016, Moneylife Foundation sent a compendium of 1,596 complaints representing the savings of over 1,138 investors, mainly senior citizens, to the ministry of corporate affairs (MCA). There is neither a response to, nor a formal acknowledgement of, our memorandum. It is our Right to Information query that led to four responses. In every one of them, MCA had merely acted as a post-office and forwarded the query to regional offices “for necessary examination and incorporation of findings thereof in investigation report.” 
 
So complaints against Jaiprakash Associates have been forwarded to Kanpur; those against Unitech Ltd to MCA’s regional director, north and complaints about Plethico Pharmaceuticals to regional director, north west. Only in case of Helios & Matheson (H&M), which has raised Rs55.25 crore from 6,540 depositors across India, was the complaint directed to the Serious Fraud Investigation Office (SFIO). Here, again, the only instruction is only for ‘examination and incorporation’ into its court-ordered investigation. 
 
Finally, we have yet to hear what happened to the complaints against Elder Pharmaceuticals and Bilcare Ltd which were listed as companies with the highest number of complaints from investors. A dozen or more squiggles on a copy of the memorandum indicate the number of eyes that have perused, at least the front page, but none has found it fit to order action that would lead to refund of investors’ money.  
 
In fact, a simple and effective action is possible even under the new Companies Act 2013 which clearly says that “Deposits accepted before commencement of the new Act have to be refunded within a period of one year or on becoming due which ever is earlier.” Had MCA been concerned, immediate refunds could have been ordered under this Section, to turn the heat on companies. After all, most investors listed by us have been running from pillar-to-post and have already filed complaints with MCA, company law board and every regulator they could think of. Less than 2% of the complaints get resolved. 
 
Moneylife Foundation has now been advised that the next course of collective action may be to approach the National Consumers Disputes Redressal Commission (NCDRC) or a class action. This would require investors to cross the threshold of a collective loss of at least Rs1 crore and for the court to be convinced that these are consumers of financial services who have been cheated. For starters, those trying to get their money back from Helios & Matheson, Elder Pharmaceuticals, Jaiprakash Associates, Unitech, Plethico Pharmaceuticals and Bilcare can send us details online here: https://www.surveymonkey.com/r/Corp_FD. But the battle is a long one and the outcome uncertain; so sensible investors would do well to follow Moneylife’s advice in future: It is not worth risking your hard-earned savings for a slightly higher interest rate. 
Comments
Bhuveneshwar Gupta
9 years ago
We are living in **** Raj, Comman man has no say! I am one of the sufferers.
Reply
Dr Anantha K Ramdas
10 years ago
I have shares in Unitech and these are in doldrums; but what is more worrying is that a close friend of mine has fixed deposits with them and they have neither paid interest nor responded to his entreaties. He needs to get both back soonest. How does he do it? what steps he should take? Can you please advice? thanks
Reply
AMOL JAVDEKAR
10 years ago
Sucheta Dalalji... Hats off to you and mOneylife foundation for the systematic way in which you are doing the noble( and uphill )task of trying to bring justice to thousands of investors.The write up which you had prepared was brilliant and very well represented. Sadly , authorities in regulatory agencies are inhuman , in spite of having the powers , being duty bound and being paid a hefty salary for it these regulators do nothing to help poor investors who are suffering day in and day out because of not being paid their invested money. Shame on these toothless regulators. It would be better to close them . At least burden on national exchequer will be reduced. As it is they are not doing anything worthwhile.... so even if these regulatory agencies are closed down what difference is it going to make ?
Reply
RAVI MENON
10 years ago
have investments in unitech and jaiprakash
no response from them
Reply
RAVI MENON
10 years ago
I HAVE INVESTMENTS IN UNITECH & JAIPRAKASH
NO RESPONSE FROM THEM
Reply
Narayana Balachandran
10 years ago
Why has Neesa Leisure not been included?
Reply
Mukund Dhaygude
10 years ago
if government is not concerned then we are also not concerned because we are the government and government is us.Yatha raja tatha praja.
Reply
Mukund Dhaygude
Replied to Mukund Dhaygude comment 10 years ago
choronke raj me chor banake hi rahana padega
Reply
TIHARwale
10 years ago
it should be recalled PVR Group Finance Director PVR Murthy of Yash Birla Groupwas arrested on January 31, 2014 after a case was registered against him, chairman Yashovardhan Birla, director Rajesh Shah and 11 other officials for default on repayment of deposits. so if a cheating complaint is lodged all that Judge needs to do is follow the above then only these corporates will understandwhat they will undergo for cheating FD investors
Reply
Baalamurugan L A
10 years ago
Thanks to moneylife for taking efforts to make this issue visible.. we need more support from govt and media to expose these issues. these companies were bigger names and suggested by leading financial advisors.. how can they be selfish? why are the regulatory bodies helpless? we need more NGO's coming forward to help these issues..
Reply
KB Rakheja
10 years ago
It is due to lack of any will to take action on part of politicians and bureaucrats nothing is happening to these serious defaulters. You never know that these companies may be funding some political parties in past and they are returning the favour now. what else explains the lack of action- corruption at the highest level. Legal recourse is so slow and cumbersome that most of the senior citizens don't have the energy and bandwidth to pursue.
Reply
manhar kothari
10 years ago
In these days of only self interest action ,moneylife foundation has taken up a issue of so many depositors who are not getting reply from any government departments.
Reply
J B SHAH
10 years ago
People go for FD'S, just because little higher rate of interest...& advice of their consultants, who advise them for the sack of higher commission rate, if the FD's are procured...People do not understand the RISK behind higher interest rates...ROC & GOVT. becomes silent viewers in the whole picture...we can not expect any help from GOVT. side.....we have to make efforts to make people literate about the risk in FD's....
Reply
Nikhil S Girme
10 years ago
Ms Dalal
Again a big thanks

Is this not a big story to be carried out by Media especially TV channels ? I know you have helped us quite a bit

But cant something bigger be done..We can have about 200 people from Pune and or Mumbai who can assemble in some place to meet Govt or CM of Maharashtra or somebody who can put us on right track

Why is govt so insensitive on this issue ?

Reply
Vaibhav Dhoka
10 years ago
This modes operindi is followed by MCA in case of complaints.In my complaint against Neesa Leisure Ltd.compint is sent to ROC Ahmedabad since no reply or action .I have often wrote in this column that it is regulators failure they are Dumb and Dead.
Reply
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